The introduction of the euro should not affect the continuity of contracts and other legal instruments. This Regulation seeks to ensure legal certainty by clarifying the conversion rates and rounding rules to be used when the single currency is introduced.

ACT

Council Regulation (EC) No 1103/97 of 17 June 1997 on certain provisions relating to the introduction of the euro [Official Journal L 162 of 19.06.1997] [See amending acts].

SUMMARY

The Regulation ensures legal certainty for contracts and other legal instruments when the euro is introduced. It sets out the rounding rules and conversion rates to be applied.

"participating Member States": Member States which adopt the single currency in accordance with the Treaty;

"conversion rates": the irrevocably fixed conversion rates which the Council adopts in accordance with the first sentence of Article 109l(4) of the Treaty or in accordance with paragraph 5 below;

"national currency units": the units of the currencies of participating Member States, as those units are defined on the day before the start of the third stage of Economic and Monetary Union or, as the case may be, on the day before the euro is substituted for the currency of a Member State which adopts the euro at a later date;

"euro unit": unit of the single currency as defined in the Regulation on the introduction of the euro, which will enter into force at the starting date of the third stage of Economic and Monetary Union.

Replacement of the ecu by the euro

Every reference in a legal instrument to the ecu is replaced by a reference to the euro at a rate of one to one.

It is presumed that contracts referring to the ecu without clearly defining it are intended to refer to the ecu as defined in Community law. European Heads of State and Government meeting at the Madrid European Council decided that the term 'ecu' used by the Treaty to refer to the European currency unit is a generic term and decided to name the single currency the 'euro'.

Continuity of contracts

The introduction of the euro will not have the effect of altering the terms of a legal instrument or of discharging or excusing performance under a legal instrument; nor will it give a party the right unilaterally to alter or terminate such an instrument (continuity of contracts). The Regulation lays down the following provisions for conversion rates and rounding rules:

Conversion rates

The conversion rates, adopted as one euro expressed in terms of each of the national currencies of the participating Member States, will have six significant figures (not to be confused with six decimal points).

The conversion rates cannot be rounded or truncated when making conversions.

The conversion rates are used for conversions either way between the euro unit and the national currency units. Inverse rates derived from the conversion rates cannot be used.

Bilateral rates for conversion between national currency units are not defined directly. Monetary amounts to be converted from one national currency unit into another are first converted into a monetary amount expressed in euros. This amount must be rounded to at least three decimals and then converted into the other national currency unit.

Rounding rules

Monetary amounts in euros must, when a rounding takes place, be rounded up or down to the nearest cent.

Monetary amounts converted into a national currency unit must be rounded up or down to the nearest sub-unit or in the absence of a sub-unit to the nearest unit.

National law or practice is to be respected such that, in some countries, rounding may be to a multiple or fraction of the sub-unit or unit of the national currency.

If the application of the conversion rate gives a result which is exactly half-way, the sum is rounded up.